Ashurst and Pinsent Masons have successfully advised the two
project companies, Ineos Runcorn (TPS) Limited and Viridor Laing
(Greater Manchester) Limited on the financial close of the £640
million Greater Manchester Waste PFI project. Viridor will be
working with John Laing on a 25-year contract, worth £3.8 billion,
to deliver waste services to the Greater Manchester Waste Disposal
Authority (GMWDA) in the largest PFI deal of its kind in
Europe. Together with chemical company Ineos Chlor Limited,
they will construct a 375,000 tonnes per annum thermal power
station (TPS) in Runcorn.
The deal will trigger a £640 million construction programme to
provide waste services for over 973,000 households in the Greater
Manchester area, totalling around 1.3 million tonnes of material
each year. Through this contract GMWDA will divert more than 75 per
cent of Greater Manchester's waste away from landfill and create
more than 5,000 jobs for the North West. Planning permission has
already been granted for 20 out of 23 project sites, with
construction expected to take five years.
Successful financial close has been secured after more than two
years of intensive negotiation between GMWDA (represented by
Eversheds) and the consortium of Viridor Waste Management Limited
and John Laing plc and chemicals group, Ineos Chlor Limited.
Unusually for a PFI project there are two separately project
financed special purpose companies (SPVs). Bank of Ireland, Lloyds
TSB, BBVA and SMBC (represented by Addleshaw Goddard) are the
commercial banks lending to the project. The European Investment
Bank also provided finance for the project.
The project is the largest to close since the credit crunch began
and is the first to involve the new Infrastructure Finance Unit
announced by Financial Secretary to the Treasury, Yvette Cooper, on
3 March. The Infrastructure Finance Unit provided additional senior
debt to enable the project to reach financial close in the
timescale required.
Ashurst advised Ineos Chlor Limited, and the second SPV, Ineos
Runcorn (TPS) Limited, on all aspects of structuring and financing
of the TPS element of the project.
The Ashurst team was led by energy, transport and infrastructure
partners, Patrick Boyle, Lee McDonald, Cameron Smith and Philip Thomson, with counsel Nick
Stalbow, assisted by partners Martin Wright,
Alexander Cox, and
Matthew Hall, and associates Garry Connolly, Jonathan Turner,
Paige Crewson, Laura Prosser, Hannah Croft, Nikhil Markanday and
Zeina Talhouni.
Commenting on the deal, Patrick Boyle said:
"The Runcorn element of the Greater Manchester project is the first
regional EfW facility to be procured through a PFI, the first EfW
facility to be designed to meet Good Quality CHP status, and the
first EfW PFI project to suppy entirely to an industrial offtaker.
All this was achieved in the context of the largest waste PFI to
date, an unprecedented project structure, and in the throes of the
credit crunch. The Ashurst team is delighted to have assisted the
Runcorn project company and Ineos Chlor in meeting these challenges
and in reaching financial close."
The contract will utilise a range of new technologies, including
Mechanical Biological Treatment with Anaerobic Digestion and a
Materials Recovery Facility. Greater Manchester's network of 25
Household Waste Recycling Centres will also be increased and
upgraded. Notably, residual waste that cannot be recycled will be
processed into a fuel for use by a Combined Heat and Power Plant at
Runcorn in Cheshire operated by Ineos Chlor, the private chemicals
group.